Woman’s case becomes victim of insurance war - East Valley Tribune: News

Woman’s case becomes victim of insurance war

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Posted: Sunday, October 19, 2003 2:52 am | Updated: 1:29 pm, Thu Oct 6, 2011.

Scottsdale lawyer Calvin Thur can deal with complexity. He can burrow through deep piles of dry documents and follow huge insurance cases through the serpentine justice system. He has been doing this for more than 20 years.

But the case of Young v. Allstate, he says, is not complex at all. It’s simple, really. In his mind, it boils down to this: Justice should not be for sale.

The case involves the Allstate Insurance Co., a Gilbert woman injured in a car crash, a court decision that went against her, and a confidential payment that Thur believes undermines the interests of justice.

"When somebody like Allstate can go out and buy the opinions they want, that’s really what I call rigging the common law," Thur said.

He represents a California-based insurance consumer group seeking to wipe Young v. Allstate off the books lest it be used, the group fears, to deprive other crash victims of fair compensation for their losses.

Allstate asserts the decision in Young v. Allstate is legitimate and already has begun citing it as precedent in cases involving the company’s controversial crash-settlement procedures. A Phoenix law firm is representing Allstate in its effort to keep the ruling in effect.

ALLSTATE UNDER FIRE

The case began Feb. 11, 1999, when Sabrina Young of Gilbert, a cancer radiation therapist, was rear-ended by an uninsured driver while stopped at a traffic signal. Her Allstate policy included uninsured motorist coverage.

Young’s Isuzu Rodeo received minor damage. Court records indicate police were not called and Young did not seek immediate medical care. One of her lawyers, Richard Dillenburg of Tempe, said she did not see a doctor for several days, when she was diagnosed with a cervical strain, given medication and told to undergo physical therapy. She was released from treatment that April, Dillenburg said.

Through Dillenburg, Young declined to be interviewed for this story.

Allstate, based in Northbrook, Ill., ranked third in Arizona in terms of autoinsurance liability policies in force as of 2002, according to the state Department of Insurance. In 2002, it had 102,062 such policies in force, about 6.6 percent of the Arizona market share. State Farm Insurance and Farmers Insurance ranked first and second.

Initially, Dillenburg said, Allstate’s adjusters appeared helpful.

"The first adjuster was very nice to her, told her, ‘We’re here to take care of you,’ told her about her rights," Dillenburg said. But soon, Dillenburg said, the case was transferred to an adjuster using Allstate’s MIST crash-settlement guidelines.

MIST is an acronym for "minor impact soft tissue" — the sorts of injuries, often invisible, associated with lowspeed crashes that insurance companies believe are often fraudulently exaggerated to inflate claims. Whiplash, bruises and sprains fall into the category.

Procedures for handling MIST cases are set out in an Allstate manual that goes by the acronym CCPR — claim core process redesign.

CCPR and MIST have come under heavy fire from insurance consumer groups and lawyers who believe Allstate uses the guidelines to make "lowball" offers to crash victims and discourage lawyers from taking their cases.

An assistant Allstate vice president, Billie J. Cohen, acknowledged the company was cracking down on softtissue injury claims when interviewed for a Feb. 7, 2000, article in Forbes magazine. "We’re not here to play games and trade dollars," he told the publication.

But Allstate spokesman Michael Trevino, speaking from the company’s headquarters, told the Tribune there is nothing sinister about CCPR and MIST.

CCPR, he said, was designed "to ensure we had consistency across the country in how we settle claims. In a nutshell, it’s about ensuring we have consistent processes."

Trevino said settlement of MIST claims involves a computer program called Colossus, which other major insurers also use.

"There are tools that help our adjusters more precisely understand how similar cases have been settled," Trevino said. "It is no way a tool that is used to require an adjuster to settle a claim within a range. It is not a substitute for the experience of the adjuster or the adjuster’s independent judgment."

Karl M. Tilleman, a lawyer with the Phoenix law firm Steptoe & Johnson, which represents Allstate, said, "The bottom line is when people at Allstate handle a claim, they’re real people using their independent judgment."

The net effect of Allstate’s practices, however, is chilling to claimants, said Amy Bach, a lawyer who is executive director of San Francisco-based United Policyholders, the insurance consumer group being represented by Thur.

"Ultimately (Allstate has) more power in the litigation," she said. "It’s a rare policyholder/plaintiff who can stay the course through appeals as far as the insurance company wants to take it."

Once the new adjuster took Young’s case, Dillenburg said, Allstate’s tone changed. "That adjuster questioned her injuries all along," Dillenburg said. "It hurt her to have her insurance company talking to her like that."

Court records show when Young rejected Allstate’s offer of $4,683.43 — an amount Dillenburg said did not even cover medical bills, much less pain and suffering — she hired a lawyer. Eventually the case went to binding arbitration. There, Young won $9,000.

VICTORY FOR ALLSTATE

That might have ended matters, but Young then filed suit in U.S. District Court, alleging Allstate had acted in bad faith.

"Allstate shouldn’t have put her through all these hoops just to get paid fairly by her own insurance company," said Dillenburg.

"My argument to the judge was if you step off the first rung of a ladder and break your hip or the 10th rung of the ladder and break your hip, what does it matter?" Dillenburg also argued that CCPR and MIST were designed to impede legitimate claims.

U.S. District Court Judge James A. Teilborg in Phoenix saw it otherwise.

In a ruling filed on July 9, Teilborg said Young had failed to prove that CCPR had any direct impact on the handling of her claim. And even if she had, Teilborg said, she did not prove "that CCPR and MIST are anything other than sound business and claim-handling practices."

This, Bach said, was exactly the ruling Allstate had been hoping for.

"I am unaware of any published decision where a judge has actually commented on the evidence of the CCPR and MIST program in a favorable way," Bach said. "This is the first published order that I know of where a judge offers an opinion on this debate."

That word "published" is key to this story.

"A published decision is law," Bach said. "An unpublished decision is not law."

A published decision can be cited as legal precedent in related cases. And that, Bach and Thur said, is what Allstate already is doing with Teilborg’s ruling — using it to defend itself in other cases around the country.

"They’re making hay with it," Bach said.

Tilleman, however, said the Young ruling cited a 5-yearold California case, also published, "that came to exactly the same conclusion" about MIST and CCPR. Furthermore, two more recent cases in Phoenix also have found in favor of Allstate on those issues, Tilleman said.

‘AGREEABLE RESOLUTION’

Teilborg’s ruling might still be unpublished had Young pursued a pending motion to reconsider it. She didn’t, and Dillenburg can’t say why. "The only thing I can say is the parties reached a mutually agreeable resolution," Dillenburg said.

But in an affidavit filed in Teilborg’s court on Aug. 27, Thur described a phone conversation with Dillenburg early in the week of July 21.

"Mr. Dillenburg indicated that Allstate had just made an offer to settle the case for one amount of money, but offered a substantially greater amount if plaintiffs would join in a request to publish the court’s summary judgment order or would at least not oppose a request by Allstate for publication," Thur wrote. "He said that another consideration of settlement was that the greater amount would only be paid if the court published the order.

"Mr. Dillenburg expressed concern over publication of the court’s order because he felt it contained erroneous conclusions regarding CCPR and that if published it would be used by Allstate against its insureds and claimants in pending and future litigation."

Still, Thur wrote, he told Dillenburg "he would have to comply with his clients’ wishes no matter how (strong) his opposition might be to publication."

A few days later, Thur wrote, he learned the case had been settled after Allstate paid Young a sum that under terms of a confidentiality clause cannot be disclosed.

Tilleman, citing the confidentiality provision, would not comment on the settlement. But in court papers, Steptoe & Johnson argued, "Simply because the Youngs accepted an increased settlement offer in exchange for agreeing not to oppose publication does not mean this court loses its discretion on publication or depublication of decisions."

BUYING THE LAW?

Thur is allied with the New York City law firm of Anderson Kill & Olick to represent United Policyholders in its motion to intervene in the case and have the Young decision de-published.

"It is against public policy for an institutional litigator such as Allstate to manipulate the common law by offering extra money to plaintiffs on a settlement in order to retain and publish a judicial opinion that will benefit Allstate and erode Allstate policyholders’ rights in pending and future litigation," the motion states.

Allstate has challenged the motion, saying United Policyholders has no legal standing to intervene in a case that was legitimately settled "after extensive briefing and oral argument by attorneys representing each of the parties." Tilleman said the case was decided on its merits by an experienced federal judge hearing from three lawyers who collectively have 60 years’ experience in court.

Teilborg has yet to rule on the motion, which Bach admits is "a long shot."

Thur said the practice of wealthy litigants "paying money to keep legal opinions on or off the books" is not new.

This case, he said, is the "flip side" of ones in which companies will pay injured parties to keep court rulings secret or to settle cases before damaging rulings can even be made.

"It’s been a problem for many years and it hasn’t really been corrected," Thur said. "It seems like the courts frequently accept these deals that are made because they want to promote settlements.

"It’s allowing people who have money and power to buy the law, basically."

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